After inking around half a dozen long-term deals on import of liquefied natural gas (LNG), the government now has moved to short-term contracts to ramp up imports of the fuel in the next two years.
State-run Petrobangla is now negotiating prices with Gunvor Singapore Pte Ltd to set a stage for signing a sales and purchase agreement (SPA), said a senior official at Petrobangla.
Bangladesh has set a target to import 24 LNG cargoes from Gunvor in the next two years before starting imports from new long-term suppliers in early 2026, he said.
The cabinet committee on economic affairs last week approved in principle the Petrobangla's LNG procurement proposal from Gunvor.
The prices of LNG to be procured from Gunvor will be determined on the basis of Japan Korea Marker, or JKM, benchmark index.
Once both the parties reach a consensus, the proposal will be sent to the cabinet committee on government purchase for approval, said the official, adding that Petrobangla will subsequently ink the SPA with Gunvor to initiate importing LNG.
It will be Bangladesh's first-ever LNG purchase deal under short-term contract and first-ever buying of LNG under JKM index, he added.
The first LNG cargo under the SPA with Gunvor is expected to reach Moheshkhali for re-gasification in any of the country's two floating, storage and regasification units (FSRUs) within 60 days of inking the SPA, said a senior official at the state-owned Rupantarita Prakritik Gas Company Ltd (RPGCL).
Gunvor is expected to deliver at least one cargo per month, and the deliveries can be changed subject to the country's demand and re-gasification capacity, said the official at the RPGCL, which is responsible for importing LNG.
Gunvor initially had placed a proposal in early January to deliver 12 LNG cargoes in 2024 and the remaining 12 cargoes in 2025. Each cargo contains LNG of 3.36 million MMBTu.
Several other suppliers also have placed proposals to Petrobangla to supply the fuel under short terms, Petrobangla officials said, adding that Petrobangla might consider their proposals too if the prices are competitive.
Currently, Gunvor has been supplying spot LNG to Bangladesh following competitive biddings with 22 other listed suppliers.
Gunvor won one of the four spot LNG cargo deliveries in Bangladesh's latest spot LNG tenders and is expected to supply April 21-22 window LNG cargo at a cost of US$9.37 per MMBTu.
Market insiders said that around six years back, a Gunvor proposal to build a small-scale FSRU was shelved by the government of Bangladesh even after inking a preliminary agreement for the supply of around 200,000 Mcf/day of regasified-LNG each for over 10 years.
It was abandoned following objections from the country's main port authority - Chattogram Port Authority - over navigability of the River Karnaphuli where the small FSRU was planned to be located.
The small-scale FSRU was meant for supplying gas ahead of the commissioning of the currently operational FSRUs.
According to Petrobangla, Bangladesh's LNG import from the long-term suppliers will more than double to 7.50 million metric tonne per annum (MTPA), or by 114.28 per cent, from existing 3.50 MTPA, in early 2026 as it has inked three new SPAs apart from two existing SPAs with Qatargas and OQ Trading International over the past one year.
All the new long-term LNG suppliers are expected to start supplying LNG from early 2026 and thereafter, market insiders have said.
Under the latest SPA inked in November 2023 with Excelerate Gas Marketing Ltd Partnership, Excelerate will supply 0.85 MTPA of LNG in 2026 and 2027.
The company will then supply 1.0 MTPA of LNG from 2028 to 2040.
It means Excelerate Energy will supply a total of 12 LNG cargoes each year during 2026 and 2027, and 16 LNG cargoes from 2028 until 2040, said a senior RPGCL official.
Under the new SPAs inked in June 2023 with QatarEnergy and OQ Trading of Oman, Bangladesh will import up to 3.0 MTPA of additional LNG from 2026 onwards.
According to the SPA between QatarEnergy and Petrobangla, the Qatari firm will supply a total of 12 LNG cargoes in 2026 and has an option to increase the supply by 12 more cargoes in 2026.
From 2027 onwards, the Qatari LNG supplier will deliver a total of 24 cargoes annually, which is equivalent to around 1.50 MTPA.
As per the SPA with the OQ Trading, the Omani company will supply four cargoes during the first year of the new contract in 2026, 16 LNG cargoes each year during 2027 and 2028, and 24 cargoes per year from 2029 onwards, until 2035.
The cabinet committee on economic affairs also approved inking of two more new SPAs to import LNG under long-term deals from Summit Oil and Shipping Company Ltd (SOSCL) and Malaysia's Perintis Akal Sdn Bhd.
As approved by the cabinet body, SOSCL, a subsidiary of Summit Group, is expected to supply up to 1.5 MTPA of LNG from 2026 for 15 years.
From Malaysia's Perintis Akal Sdn Bhd, Petrobangla hopes to initiate imports of up to 1.0 MTPA in 2024.
Although the government has been ramping up LNG imports, state-run Petrobangla has long been struggling to clear payment dues to the LNG suppliers.
Petrobangla, for the first time, will borrow US$500 million from Jeddah-based Islamic Trade Finance Corporation (ITFC) in fiscal year 2024-25 to foot the LNG import bills.
It previously spent around Tk 20 billion from the Gas Development Fund (GDF) to facilitate LNG imports.
The GDF was created initially to provide funding assistance for hydrocarbon exploration -- in potential onshore fields and almost virgin turfs in the Bay of Bengal.
Azisjst@yahoo.com